Earlier this week, something amazing happened in London. Startup Caravan hosted a French startup competition – in London. Yes, London. 10 French startups were picked to hop across the English Channel and pitch for the London tech community. While there are numerous international and pan-European startup competitions that allow startups from wherever to pitch, this was one of the first times a clear effort was made to introduce some of France’s top tech startups to the UK startup crowd.
The truth about Europe.
One of the first things that people say when they try to compare Europe to the US (which is getting so incredibly annoying yet somehow impossible to avoid) is that Europe is a fragmented market. It’s often difficult for entrepreneurs in one country to navigate in another, even if they happen to be neighbors. More often than not, stereotypes stick and unless you actually go and immerse yourself in the local startup scene of that particular country, you won’t get an accurate idea of what entrepreneurs and investors actually think.
Breaking the French mold.
As part of the startup competition, the 5 finalists were also asked to share some of their thoughts on being an entrepreneur in France and on expanding to the UK or internationally. It was very interesting to hear some of their opinions. First, nobody on the panel said they would be leaving France because of François Hollande. Some of the startups also said they felt there was a certain advantage to being based in France for their particular business. For example, the winning startup – La Ruche Qui Dit Oui – is able to leverage France’s culinary traditions and image to its benefit. But beyond food, pure tech companies also found France to offer certain benefits – like, mobile payments platform Skimm, who felt that France’s credit card processing fees and customs were advantageous when compared with those of other markets. Other examples of advantages included being able to hire incredible tech talent for a more affordable price than in Silicon Valley and very generous R&D tax credits.
A video demo of Skimm’s QR-code mobile payments system.
“So what would you CHANGE about France?”
All entrepreneurs were also asked to come up with one thing they would change about France’s ecosystem. To perhaps everyone’s surprise, nobody brought up labor laws. The main issues included…
Difficult to raise but still possible…
One issue that was brought up twice was access to capital. While France does count quite a few impressive VC funds – like Alven Capital, Ventech, Elaia and Partech, amongst others – there are still relatively few funds that do seed-stage investments. Other countries on the continent are in a similar (or often worse) situation when it comes to access to venture capital. But French entrepreneurs also feel that French VCs move slowly when compared to their British counterparts and they also seemed to feel that they would have an easier time securing investment in London than Paris. The French government has made attempts to encourage investment in France – with initiatives like ISF and also the creation of state-backed funds like the Fonds national pour la société numérique (FSN) but these have definitely not had the desired impact and even compete with VCs and more seasoned investors at times.
2. Lacking collaboration between large corporations and startups.
It definitely isn’t news that many large corporations have a potentially harder time with innovation. In France – like other European countries – there is definitely a clear divide between large corporations and smaller startups. For example, a while ago, Michelin launched an online restaurant guide developed entirely in-house rather than collaborating with one of the many startups that had already developed such a product, like Restopolitan. There are actually plenty of other examples of large companies reinventing the wheel, steeling startup ideas and being flat out incapable of collaborating with the local entrepreneurs. Still, there are some companies that manage to make investments (like Dassault Systèmes) or even acquisitions (Dassault, Alcatel-Lucent, Ubisoft…) of innovative companies. So not all is lost, hopefully.
3. Lack of acquisitions/exit opportunities.
This is actually very related to the last point – there are fewer exit opportunities for French companies. The IPO market is very different to that of the US and the acquisition opportunities are much more limited. But his doesn’t mean they’re non-existent. Actually, there have been several acquisitions this year with more to be announced in the near future. Looking at the entire continent, France’s history of acquisitions is probably very much in sync with the rest of Europe.
These were the 3 main issues that were raised – in addition to poor English-speaking, which quite frankly, I don’t think is that much of an issue for the younger generation and new wave of entrepreneurs.
The reaction from the crowd?
The audience actually seemed particularly impressed with the French startups, finding them to be very high quality and advanced in their activity. Pitches demonstrated proof of concept, traction, conversion and more – and clearly had products with great potential. It was clearly a great way to introduce the French ecosystem and startup culture to the London crowd. Hopefully there will be more cross-border events in the future – and I encourage anyone who can to go.
Not every entrepreneur wants to be Richard Branson?
After François Hollande was elected into office there were many articles that came out saying that the French entrepreneurs and business crowd would be flocking to the UK to escape the socialists madness that was now to run France. While none of the entrepreneurs agreed with this sentiment, some also even said that they would not necessarily be eyeing London as the first place for international expansion – like La Ruche Qui Dit Oui who preferred to go after southern European countries. Naturally, the UK competes with the Anglophone market of the US, which was not surprisingly the priority for some of the teams. In addition, while some companies like La Ruche Qui Dit Oui and Skimm said that they would definitely need to have a very local development strategy because of the nature of their business, other companies like Moodstocks, Infinit and SocialFolders said they didn’t necessarily need an international presence for their product to be international. Clearly, it is very difficult to generalize – even when it comes to French startups. 🙂